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I got it. The cause of the subprime mess.

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August 20, 2007 – Comments (0)

Many posters more knowledgable than I am, have been and still are, discussing how this subprime problem happened. Regardless of my relative ignorance on the subject, I too will weigh in and share that ignorance with the world. Now anyone can guess why the low income buyer would jump at the chance to own a $350,000. house for $450.00/month and no money down. It was just to easy to believe it was possible when so many tell you it will be o.k.  It is also easy to understand why a mortgage broker will write that buyer a loan when she is earning her commission, the brokerage is collecting fees and profiting on a loan they will then sell and not have to collect. I can understand that wanting to work is why appraisers were more concerned about the loan amount than the value of the house. Real estate salespeople promising home sellers more than their neighbors house sold for so they could get listings is clear as day. Home owners wanting a windfall from their house is easy. But what has always gotten past me, stumped me entirely, is why someone would buy the right to collect a loan given to someone who was hiding income, or clearly could not pay. Now these folks were not supposed to be idiots. These were college educated folks. Captains of industry, movers and shakers, champions of capitalism. So how could they have blundered so badly?  And then this article from the The Herald News, delivered by the AP, came tumbling across my computer screen. And I understood.

The amount of five major painkillers sold at retail establishments rose 90 percent between 1997 and 2005, according to Drug Enforcement Administration figures.

More than 200,000 pounds of codeine, morphine, oxycodone, hydrocodone and meperidine were purchased at retail stores during 2005, the most recent year represented in the data. That is enough to give more than 300 milligrams of painkillers to every person in the country.

In fact this explains so much...

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